Financial markets are “on edge” following President Joe Biden’s surprising decision to end his reelection campaign and endorse Vice President Kamala Harris, according to the CEO and founder of a major independent financial advisory and asset management firm.
In a dramatic turn of events, Biden announced on Sunday that, despite the honor of serving as President, stepping down was “in the best interest of my party and the country.” His departure, effective immediately, adds a new dynamic to the already intense race for the White House. Biden will continue to serve as President until January.
The deVere CEO notes, “This unexpected development introduces a new variable into the 2024 election landscape, causing significant uncertainty in the markets.”
“With Biden stepping down, the primary question looming over investors is whether to continue betting on the ‘Trump Trade’.”
The term Trump Trade refers to the market behaviors and trends that emerged during Trump’s presidency, driven by his administration’s looser fiscal policies, deregulation, higher tariffs and infrastructure spending.
“The impact of these policies on the markets included a rising dollar, higher bond yields, specific sectors like banking, healthcare, energy, and industrials seeing gains due to deregulation and anticipated infrastructure projects, and Bitcoin seeing increased interest,” notes Nigel Green.
He continues: “Now, as Vice President Harris steps into the spotlight, the markets are set to experience heightened uncertainty.
“The immediate challenge for investors is to ascertain whether Harris can quickly consolidate her party’s support, secure the Democratic nomination, and mount a formidable campaign against Trump.
“If Harris can gain significant traction and pose a credible threat to Trump’s lead in the polls, market volatility is expected to persist.
“Investors will likely remain on tenterhooks, closely monitoring the political landscape and adjusting their portfolios to hedge against potential risks.
“This sustained volatility would be a reflection of the uncertainty surrounding Harris’s ability to compete effectively against Trump.”
The key for investors will be to remain agile, diversifying their portfolios to mitigate risks and capitalize on opportunities as they arise.
Those with a higher risk tolerance will look to exploit the volatility by making tactical trades based on the latest political developments.
Nigel Green concludes: “Joe Biden’s decision to step down and endorse Harris has set the stage for a tumultuous period in the markets.
“Whether Harris can mount a successful campaign against Trump, or whether Trump will solidify his lead, will be the critical factors determining the extent and duration of this market volatility.”